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New India Assurance Co., Indore v. Bagdibai Manaklal And Others
Factual and Procedural Background
This appeal arises from an award dated April 25, 1978, passed by the Commissioner for Workmen's Compensation, Ratlam, in W.C. Case No. 25 of 1977. The claimants (respondents Nos. 1 to 4) are the legal representatives of the deceased driver, Manaklal. They filed an application for compensation on July 16, 1977, alleging that Manaklal died on March 19, 1977, from injuries sustained in an accident while driving the employer-respondent No. 5's tractor during the course of employment.
The Commissioner, after recording evidence, found that the deceased held a valid driving licence at the time of the accident, that the death occurred in the course of employment, and that an application for compensation against the insurer was maintainable. Accordingly, the Commissioner awarded Rs. 18,000 as compensation and costs of Rs. 100, held the appellant insurance company liable to pay the award, and provided for interest at 6% per annum from May 26, 1978, if the compensation was not paid by May 25, 1978.
The appellant (the insurance company) appealed against the Commissioner's award challenging, principally, the jurisdiction of the Commissioner to pass an award against the insurer and contending that questions of breach of the insurance policy (specifically that the deceased did not hold a proper licence) were matters for a civil court and not for the Commissioner under the Workmen's Compensation Act.
Legal Issues Presented
- Whether the Commissioner for Workmen's Compensation has jurisdiction under the Workmen's Compensation Act to pass an award directly against an insurance company which insured the employer's vehicle.
- Whether a contention of breach of the insurance policy (for example, that the deceased driver did not hold a valid driving licence) is a matter that the Commissioner can decide in proceedings under the Workmen's Compensation Act, or whether such a question must be determined by a civil court.
- What is the interplay between the Workmen's Compensation Act and Sections 95 and 96 of the Motor Vehicles Act (as discussed in the opinion) in determining insurer liability for compensation awarded under the Workmen's Compensation Act?
Arguments of the Parties
Appellant's (Insurance Company) Arguments
- The Commissioner has no jurisdiction to pass an award against the insurance company under the Workmen's Compensation Act because the insurance company is not an "employer" as defined by the Act and the Commissioner has not been granted power to determine insurer liability.
- The insurance company could not be impleaded as a non-applicant in compensation proceedings except in cases covered by Section 14 of the Workmen's Compensation Act (dealing with employer insolvency), which is not applicable here.
- The insurer had pleaded a breach of the conditions of the insurance policy — viz., that the deceased did not hold a valid driving licence — and this is a contractual matter that should be determined by a civil court and not by the Commissioner.
Respondents' (Claimants') Arguments
- When an employer has entered into a contract with an insurance company in respect of any liability under the Workmen's Compensation Act, the Commissioner can make an award declaring the insurer's liability.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| R. B. Moondra and Co. v. Mst. Bhanwari, AIR 1970 Raj 111 | Holds that the insurance company does not fall within the definition of "employer" under the Workmen's Compensation Act; Commissioner has no jurisdiction to award compensation against insurer unless Section 14 applies; Section 96(1) Motor Vehicles Act does not contemplate decree against the insurer himself. | Noted by the court as a decision cited by the appellant; the court considered it but treated later Division Bench decisions of this court as binding. |
| United India Fire & Gen. Ins. Co. Ltd. v. Joseph Mariam, [1979] ACJ 349 (Kerala) | Held that only circumstances specified in Sub-section (1) of Section 14 (Workmen's Compensation Act) allow liability of the employer to extend to the insurer; Commissioner cannot direct insurer to deposit compensation unless those conditions are satisfied. | Cited by appellant's counsel; the court recorded the principle but relied on binding Division Bench decisions of this court to reach its conclusion. |
| New India Assurance Co. Ltd. v. Parameswari Amma, [1976] ILR 1 Ker 237 | Earlier Kerala decision followed in Joseph Mariam holding limits on Commissioner's power vis-à-vis insurer under Section 14. | Cited in support of the Kerala High Court position; the present court acknowledged the citation but applied its own binding precedents. |
| New India Assurance Co. Ltd. v. Dujiya Bai, [1983] ACJ 601; [1986] 60 Comp Cas 940 (MP) | Held that Section 14 does not negative insurer liability in cases where Section 14 is not attracted; insurer was held liable by the Workmen's Compensation Commissioner in a death-in-service case. | Identified by the court as a decision of this court unfavourable to the appellant and supportive of the view that an insurer can be held liable even where Section 14 is not invoked. |
| Northern India Insurance Co. Ltd. v. Commissioner for Workmen's Compensation, [1973] MPLJ 548; [1973] ACJ 428 | Held that insurer can be made a party to proceedings before the Workmen's Compensation Commissioner; provisions of Section 96 of the Motor Vehicles Act apply; insurer is liable as if a judgment-debtor and may take only the defences permitted by Section 96(2). | Described as a Division Bench decision of this court and relied on as binding; the court followed this principle in holding that the Commissioner can pass an award against the insurer. |
| New India Assurance Co. Ltd. v. Bismilla Bi, [1986] 59 Comp Cas 188 (MP) | Held that the Commissioner for Workmen's Compensation has jurisdiction to consider insurer liability along with that of the employer. | Cited as supportive authority from this court; the opinion uses it to support the view that the Commissioner can adjudicate insurer liability. |
| Chottelal v. Dhalloomal Sindhi, [1984] ACJ 591; [1986] 60 Comp Cas 937 (MP) | Division Bench decision following Northern India holding that Commissioner can pass an award against the insurer when insurer is joined in a compensation application. | Called a Division Bench decision binding on the court; relied upon as authority that the Commissioner can award against the insurance company. |
| Northern India Motor Owners' Ins. Co. Ltd. v. Magan Shanaji Solanki, [1974] ACJ 55 (Gujarat) | The opinion cites this decision; the specific rule or proposition from the case is not stated in the provided text. | Cited by the appellant; the court listed it among other High Court decisions considered. |
| Bibhuii Bhusan Mukherjee v. Smt. Dinamani Dei, [1982] ACJ 338; [1983] 54 Comp Cas 286 (Orissa) | The opinion cites this decision; the specific rule or proposition from the case is not stated in the provided text. | Mentioned among decisions of other High Courts cited by the appellant; no detailed application in the opinion. |
| Oriental Fire & Gen. Ins. Co. Ltd. v. Govind Singh, [1972] ACJ 134 (Allahabad) | The opinion cites this decision; the specific rule or proposition from the case is not stated in the provided text. | Listed among cases of other High Courts cited by counsel; not analyzed in detail in this opinion. |
| Sital Prasad v. Afsari Begum, [1977] ACJ 486 (Allahabad) | The opinion cites this decision; the specific rule or proposition from the case is not stated in the provided text. | Listed among High Court decisions cited by counsel; not further discussed in the text. |
| Oriental Fire & Gen. Ins. Co. Ltd. v. G. Gopalakrishna Pillai, [1978] ACJ 473 (Kerala) | The opinion cites this decision; the specific rule or proposition from the case is not stated in the provided text. | Included in the list of decisions of other High Courts referred to by the parties; the opinion does not elaborate further on its contents. |
Court's Reasoning and Analysis
The court's analysis rests on (a) the binding nature of Division Bench decisions of this court and (b) the statutory interplay between the Workmen's Compensation Act and the Motor Vehicles Act.
First, the court observed that Division Bench decisions of this court (specifically Northern India Insurance Co.'s case and Chottelal's case, among others from this court) have held that an insurance company may be made a party to compensation proceedings and that the Commissioner has the jurisdiction to pass an award against the insurer. Those decisions are binding on the present court and therefore carry decisive weight.
Second, the court analysed the statutory relationship between the Acts. It noted that in cases of personal injury or death arising from a motor accident in the course of employment, both the Workmen's Compensation Act and Sections 95 and 96 of the Motor Vehicles Act become relevant. The liability under the Workmen's Compensation Act is covered by the proviso to Section 95(1)(b) of the Motor Vehicles Act. Under the scheme of statutory insurance, the employee's remedy should not depend on the employer's financial capacity; Section 96(1) of the Motor Vehicles Act imposes a duty on the insurer to satisfy a judgment (here, the award made by the Commissioner).
The court further explained that the Commissioner is competent to decide and declare an insurer's liability when the insurer has been made a party to proceedings under the Workmen's Compensation Act and that the insurer may defend the proceedings on the grounds available under Section 96(2) of the Motor Vehicles Act. In the present case, the insurer specifically defended on the ground that the deceased did not hold a proper driving licence (a policy condition breach). The Commissioner framed and decided that issue (question No. 2), finding on the evidence that the deceased did hold a valid licence.
Having found the primary liability of the employer established and having rejected the insurer's defence that there was a breach of policy condition (no valid licence), the court concluded that the insurer could not avoid its liability to indemnify the insured in respect of the compensation awarded.
Holding and Implications
Holding: The appeal by the insurance company fails and is dismissed. The court affirmed the Commissioner's award of Rs. 18,000 as compensation and costs of Rs. 100, and the Commissioner was correct in holding the insurer liable to satisfy the award. There shall be no order as to the costs of the appeal.
Implications:
- Direct effect on the parties: The Commissioner's award (Rs. 18,000 compensation and Rs. 100 costs, with interest at 6% per annum from May 26, 1978 if unpaid by May 25, 1978) stands against the employer and the insurer, and the insurer is required to satisfy the award subject to the defences permissible under Section 96(2) of the Motor Vehicles Act.
- Precedential effect as recorded in the opinion: The court reinforced and applied prior Division Bench decisions of this court to hold that a Workmen's Compensation Commissioner can adjudicate insurer liability in proceedings under the Workmen's Compensation Act where the insurer is properly made a party; the insurer may litigate only those defences available under Section 96(2) of the Motor Vehicles Act. The opinion therefore confirms the application of those earlier Division Bench rulings in like circumstances.
Note: All statements in this summary are drawn exclusively from the provided opinion text. Nothing has been added or inferred beyond what the opinion itself states.
JUDGMENT R.K. Verma, J.
1. This is an appeal by the insurance company against the award dated April 25, 1978, passed by the Commissioner for Workmen's Compensation, Ratlam (hereinafter called "the Commissioner "), in W. C. Case No. 25 of 1977 whereby the learned Commissioner has awarded Rs. 18,000 as compensation and costs of Rs. 100 to be paid by the insurance company to the claimants who are legal representatives of the deceased driver, Manaklal, who died during the course of his employment in an accident while driving the tractor of the employer, respondent No. 5, the insured.
2. The claimants, who are respondents Nos. 1 to 4, filed an application for compensation before the Commissioner against the appellant and respondent No. 5 on July 16, 1977, alleging that the deceased, Manaklal, who was employed by respondent No. 5 as a driver, died in the course of his employment due to the injuries sustained by him in an accident which occurred on March 19, 1977, while driving the tractor of the employer. Respondents Nos. 1 to 4, therefore, claimed a sum of Rs. 18,000 by way of compensation from the employer, i.e., respondent No. 5, and the present appellant with whom the said tractor was insured.
3. The appellant-insurance company resisted the claim on the ground, inter alia, that the Commissioner has no jurisdiction to pass an award against the insurance company under the Workmen's Compensation Act and the insurance company could not be impleaded as a party non-applicant. The appellant insurance company alleged that the deceased driver did not hold a valid and proper licence at the time of the accident and that since the employer, respondent No. 5, who was the owner insured in respect of the tractor, had committed a breach of the policy conditions and a contention in that regard had been raised by the appellant insurer, the Commissioner was not competent to decide the question of breach of condition of the insurance policy in respect of the tractor.
4. The learned Commissioner, after recording evidence, came to the conclusion that the deceased, Manaklal, held a valid driving licence at the time of the accident and that he died in the course of his emplyoment under respondent No. 5 and that the application for compensation against the appellant insurance company was maintainable and that he was competent to decide the question of breach of the policy conditions. The learned Commissioner by the order under appeal awarded an amount of Rs. 18,000 as compensation and costs aforesaid, against the employer, respondent No. 5, and held the appellant insurer liable for payment of the compensation awarded to the claimants. In the event of the said compensation amount not being paid by May 25, 1978, by the insurance company, interest has been awarded at the rate of 6% per annum on the amount of compensation as payable from May 26, 1978, till full payment.
5. Learned counsel for the appellant has challenged the award mainly on the ground that the Commissioner had no jurisdiction to pass an award against the insurance company under the Workmen's Compensation Act, because he has not been given power to decide the question of liability of the insurer as against the insured. It is the contention of learned counsel that in the instant case, the appellant insurance company has pleaded a breach of the contract of insurance which is a matter for the civil court to ascertain and determine and not the Commissioner who is not entitled to probe into the matter. The Commissioner under the Workmen's Compensation Act can only decide the employer's liability for compensation and the insurance company need not be joined as a non-applicant except in a case of insolvency of the employer covered by Section 14 of the Workmen's Compensation Act, which is not the present case.
6. The contention of learned counsel appearing for the claimants, on the other hand, is that where the employer has entered into a contract with the insurance company in respect of any liability under the Workmen's Compensation Act to any workman, an award declaring liability of the insurance company can be made by the Commissioner.
7. Learned counsel for the appellant insurance company cited in support of his contention a decision of the Rajas than High Court in R. B. Moondra and Co. v. Mst. Bhanwari, AIR 1970 Raj 111. It has been observed at page 117 of that decision as follows:
" As for the second contention, the Act as appears from its preamble was enacted to provide for the payment by certain classes of employers to their workmen of compensation for injury by accident. The term 'employer' has been defined in the Act and the insurance company does not come within the ambit of that definition. Therefore, the Commissioner appointed under the Act will have no jurisdiction to award compensation to a workman against the insurance company unless the case falls within Section 14 of the Act which deals with the liability of the insurers when the employer becomes insolvent, where he has entered into a contract with any insurer in respect of any liability under this Act. Obviously, Section 14 has no application in this case. Learned counsel, however, relies upon the provisions of Section 96(1) and (2) of the Motor Vehicles Act. Under Section 96(1), an insurer is deemed to be a judgment-debtor when under certain circumstances a decree is passed against the insured. But it does not contemplate passing of a decree against the insurer himself."
8. Another decision cited by learned counsel for the appellant, in support of his contention, is a decision of the Kerala High Court in United India Fire and General Insurance Co. Ltd. v. Joseph Mariam [1979] ACJ 349. "In this case, it was held, following an earlier decision of that court, New India Assurance Co, Ltd. v. Parameswari Amma [1976] ILR 1 Ker 237, that under the scheme of the Workmen's Compensation Act, the only circumstances under which the liability of the employer extends to the insurer also are those specified in Sub-section (1) of Section 14 and that except in cases where the conditions laid down in the sub-section are duly satisfied, the Commissioner for Workmen's Compensation has no jurisdiction to issue any direction to the insurer to deposit into this court the amount of compensation payable by the employer to the dependant of the deceased employee.
9. Learned counsel, however, also brought to my notice three decisions of this court which are unfavourable to him, viz., New India Assurance Co. Ltd. v. Dujiya Bai [1983] ACJ 601; [1986] 60 Comp Cas 940 (MP) (infra), Northern India Insurance Co. Ltd. v. Commissioner for Workmen's Compensation [1973] MPLJ 548 ; [1973] ACJ 428 and New India Assurance Co. Ltd. V. Bismilla Bi [1986] 59 Comp Cas 188 (MP). Another decision of this court was, however, cited by learned counsel for the respondents-claimants, viz., Chottelal v. Dhalloomal Sindhi [1984] ACJ 591; [1986] 60 CompCas 937 (MP) (infra).
10. In New India Assurance Co. Ltd.'s case [1983] ACJ 601; [1986] 60 Comp Cas 940 (MP), it was held that Section 14 does not negative the liability of the insurance company in cases where Section 14 of the Act is not attracted. It was a case of death of a truck driver in an accident during the course of employment and the Workmen's Compensation Commissioner had determined compensation under the Workmen's Compensation Act and had held the insurance company which had insured the owner of the truck, liable to pay the compensation amount.
11. In the Division Bench decision in Northern India Insurance Co.'s case [1973] MPLJ 548; [1973] ACJ 428, which was a case of a workman who suffered injury in a truck accident while working on duty, it was held that the insurance company could be made a party to the proceedings before the Workmen's Compensation Commissioner and that the provisions of Section 96 of the Motor Vehicles Act are applicable to proceedings under the Workmen's Compensation Act. Although the primary liability is that of the employer, yet the insurance company is also liable to discharge the claim as if it was a judgment-debtor under Section 96 aforesaid. It was held that the insurance company could take up only such defence as was laid down in Section 96(2) of the Motor Vehicles Act.
12. In the case of New India Assurance Co. Ltd.'s case [1986] 59 Comp Cas 188 (MP), it was held that the Commissioner for Workmen's Compensation has the jurisdiction to consider the question regarding the liability of the insurance company along with that of the employer.
13. In the Division Bench decision of this court in Chottelal's case [1984] ACJ 591; [1986] 60 Comp Cas 937 (MP), it was held, following the Division Bench decision in Northern India Insurance Co.'s case [1973] MPLJ 548; [1973] ACJ 428 (MP), that on a compensation application under the Workmen's Compensation Act against the employer and the insurance company with which the truck was insured, the Commissioner can pass an award against the insurance company also.
14. The Division Bench decisions of this court are binding on this court and, as such, it has to be held that the Commissioner can pass an award against the insurance company also.
15. Learned counsel for the appellant also cited a few decisions of other High Courts, namely, a decision of the Gujarat High Court in Northern India Motor Owners' Insurance Co. Ltd. v. Magan Shanaji Solanki [1974] ACJ 55, a decision of the Orissa High Court in Bibhuii Bhusan Mukherjee v. Smt. Dinamani Dei [1982] ACJ 338 ; [1983] 54 Comp Cas 286 (Orissa), the two decisions of the Allahabad High Court, viz., Oriental Fire and General Insurance Co. Ltd. v. Govind Singh [1972] ACJ 134, and Sital Prasad v. Afsari Begum [1977] ACJ 486, and a decision of the Kerala High Court in Oriental Fire and General Insurance Co. Ltd. v. G. Gopalakrishna Pillai, [1978] ACJ 473.
16. From a reading of the aforesaid decisions also, it is clear that in a proceeding under the Workmen's Compensation Act, the primary liability rests on the employer and when his primary liability is established then it can be enforced against the insurer. The award has to be against the insured with a declaration that the liability has to be satisfied by the insurance company. The Commissioner is competent to decide and declare the liability of an insurer made a party to the proceedings before him under the Workmen's Compensation Act, 1923, in accordance with the provisions of Section 96 of the Motor Vehicles Act, 1939.
17. There can be no doubt that in a case of personal injury or death of a workman in the course of his employment and arising as a result of a motor accident, the provisions of the Workmen's Compensation Act as well as the provisions of Sections 95 and 96 of the Motor Vehicles Act shall be attracted, if the owner of the motor vehicle is insured in respect of that vehicle. The liability arising under the Workmen's Compensation Act, 1923, is statutorily covered under the proviso to Section 95(1)(b) of the Motor Vehicles Act. The liability is accident liability covered by insurance being also a liability under the Workmen's Compensation Act which has, therefore, to be determined only under the provisions of the Workmen's Compensation Act Under the scheme of statutory insurance, the employee's remedy is not made to depend on the financial capacity of his employer, but the insurance company would have the duty under Section 96 (1) of the Motor Vehicles Act to satisfy such a judgment, that is to say, the adjudication by way of award made by the Commissioner under the Workmen's Compensation Act.
18. The insurance company was entitled to be made a party to the proceedings of which notice had been given to it, and to defend the action on any of the grounds contained in Section 96(2) of the Motor Vehicles Act. In the instant case, the insurance company did take the defence on the ground that there was a breach of a condition of the policy inasmuch as the person driving the truck, namely, the deceased, Manaklal, was not holding a proper driving licence. The Commissioner, after framing question No. 2 on the issue and after considering the evidence adduced in the case on the question, found that the deceased, Manaklal, held a valid driving licence.
19. In the circumstances, the insurance company is not entitled to avoid its liability to indemnify the insured in respect of the liability arising on account of the deceased-employee dying as a result of a motor accident. As has been noticed in the Division Bench decisions of this court, cited above, the Commissioner had the jurisdiction to pass an award against the insurance company also.
20. Consequently, this appeal fails and is hereby dismissed. There shall, however, be no order as to the costs of this appeal.
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